Consider two hypothetical savers, Emily and Dave. Emily puts $200 per month into a retirement account with an estimated 6% rate of return starting at 25. Dave starts saving $200 per month at 35, just 10 years after Emily.

Both continue to add $200 each month until they retire at 65.

By the time they are 65, Emily has contributed $96,000, while Dave has contributed $72,000.

Here's the trajectory of both of those accounts:

Emily started saving just 10 years earlier and put in only about 33% more money into her account than Dave put in his.

But by the time they are both ready to retire, Emily has almost twice as much as Dave — Emily has $402,492, and Dave has $203,118.

That extra 10 years of compounding returns has made Emily's situation far better than Dave's when they are 65.